Answer the following statements true (T) or false (F)
1. As the economy expands, it requires less and less investment.
2. Keynes described a horizontal short-run aggregate supply curve when output can be increased by using unemployed resources.
3. As income increases, the absolute level of planned consumption will increase.
4. Keynes recommended the use of government deficit spending to overcome widespread unemployment.
5. A composite aggregate supply curve is horizontal at low levels of output, then upward sloping for higher levels of output until output reaches capacity and the AS curve becomes vertical.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. TRUE
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In the figure, the equilibrium price is initially $3 per bushel of wheat. If buyers come to expect that the price of a bushel of wheat will rise in the future, but sellers do not, the current equilibrium price will
A) rise. B) not change. C) fall. D) Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
If a health insurer charges a rate equal to the average cost of health care for the entire population, then it is likely that
A) everyone buys health insurance. B) unhealthy people will not buy health insurance. C) healthy people will not buy health insurance. D) nobody will buy health insurance.
Which of the following countries have used adjustments to the required reserve ratio as a primary tool of monetary policy?
A. United States B. China C. Mexico D. India
Efficiency occurs if the:
A. government does not interfere with market prices. B. market is in equilibrium. C. individually rational quantity of goods and services is being produced. D. socially optimal quantity of goods and services is being produced.